23 Jun 2010 07:48
23 June 2010
Bellzone Mining plc
("Bellzone" or the "Company")
Results for the year ended 31 December 2009
Bellzone Mining plc (AIM:BZM), the iron ore company developing the 2.4 billion tonne JORC magnetite Kalia Iron Project ('Kalia') along the estimated 13 billion tonne Kalia magnetite deposit in Guinea, West Africa, today announces its full year results for the year ended 31 December 2009.
Highlights
·; Delineation of maiden 'Inferred' magnetite JORC resource of 2.4 billion tonnes at Kalia Iron Project per schedule
·; 20,669m diamond drilling completed up to 31 December 2009 as per plan
·; All planned site development activities completed to plan
·; Finalised acquisition of 100% interest in Guinean subsidiaries that holds 100% of the rights for the Kalia and Faranah iron ore permits and the Albadaria polymetals permit. Bellzone retains 100% of the rights until execution of definitive agreements with China International Fund ('CIF'), at which time 100% of the Faranah Permit and approximately 50% of the Kalia II Prospect will be transferred to CIF (see announcement dated 24 May 2010)
·; Bellzone Management Services PTY LTD incorporated in Australia to provide support services to the Group
·; Relocation to larger office in Perth to accommodate growth
Post Period Highlights
·; Admission to AIM and raising of £33.6 million (US$50m) before expenses
·; Binding memorandum of understanding (the "Binding MOU") reached with CIF to develop ail and port infrastructure for the Kalia Iron Project
·; Bellzone and CIF form Kalia Horizons Minerals Pte Ltd ('KHM'), for the development of the infrastructure required for the Kalia Iron Project
·; On 14 June 2010, KHM received US$40 million from CIF to fund the infrastructure feasibility study
·; Bellzone and CIF to create a 50:50 joint venture to finance, develop, produce, transport, export and sell iron ore from the Forecariah Permits held by a subsidiary of CIF in south west Guinea
·; Signed Accord with the Republic of Guinea providing Bellzone the exclusive rights to conduct the technical and economic feasibility studies for the infrastructure
·; Appointment to the Board of Terry Larkan as Financial Director and Simon Farrell as Non-Executive Director
·; Diamond drilling on magnetite continued to plan for JORC upgrade scheduled in Q3 2010
·; Reverse Circulation drilling commenced on surface oxide with maiden JORC resource expected Q4 2010
·; Commencement of Socioeconomic ('SEIA') and Environmental studies ('EIA') for the Kalia mine site
·; Lodgement of the infrastructure concession and basic convention applications for the Kalia Iron Project in April, ahead of schedule
·; Relocation to larger offices in Conakry, Guinea
Financials
·; Raised £33.6 million (US$50m equivalent) before expenses through IPO on AIM in April 2010
·; Current cash balance of US$50 million to be used primarily for the development of resources and bankable feasibility study on the Kalia Iron Project
Nik Zuks, Managing Director of Bellzone Mining plc, commented: "Exploration activities in 2009 delivered a maiden JORC Inferred resource of 2.4 billion tonnes at our Kalia Iron Project in Guinea. We have continued our aggressive exploration programme and remain on track to increase the size and status of the resource in Q3 2010, as well as deliver a maiden JORC resource for the oxide by year end. In parallel with the resource development programme, the Company has also commenced the SEIA and EIA studies and an early works programme in support of the bankable feasibility study.
Developments on a corporate level have matched the excellent operational progress. 2010 has seen the Company list on London's AIM market as well as reach a Binding MOU with China International Fund to develop the rail and port infrastructure for the Kalia Iron Project. The agreements with CIF represent an exciting opportunity for CIF, Bellzone and Guinea. The infrastructure will develop a multi-user railway and port in what will be one of the largest projects of its kind in the region."
Enquiries:
| Bellzone Mining plc Nik Zuks |
+61 439 420 893 |
|
Canaccord Genuity Limited Nominated Adviser and Joint Broker to Bellzone Andrew Chubb/Tarica Mpinga |
+44 (0)20 7050 6500 |
|
Renaissance Capital Limited Joint Broker to Bellzone Simon Matthews/Thomas Beattie |
+44 (0)20 7367 7777 |
|
Conduit PR Jos Simson/Charlie Geller |
+44 (0)20 7429 6603 / +44 (0) 7899 870 450 |
Bellzone Mining plc
Bellzone Mining plc is an iron-ore exploration and development company with assets in Guinea, West Africa. The Company's flagship project, the Kalia Iron Project, is underpinned by its 100% owned Kalia iron deposit which has a maiden inferred magnetite JORC resource of 2.4 billion tonnes, located on the Kalia I prospect. Geological assessment and drilling results underpin an internal estimate that indicates the Kalia iron deposit has the potential to host more than 13 billion tonnes of magnetite ore and 2.9 billion tonnes of surface oxide. Exploration work continues to further delineate and increase the resources at Kalia with the SEIA and EIA studies already underway in support of the bankable feasibility study.
Bellzone intends to develop a 50 million tonnes per annum ('mtpa') iron ore operation through a two staged approach. First production is expected in 2014 at 20mtpa which is expected to fund the expansion to 50mtpa schedule for completion in 2018.
On 24 May 2010, Bellzone reached a Binding Memorandum of Understanding ('MOU') with China International Fund ('CIF') with regards to the financing of the infrastructure required for the Kalia Iron Project.
The Binding MOU is subject to the parties agreeing and executing definitive agreements for the infrastructure company, joint venture agreement and off-take agreement on or before 30 June 2010 or such later date as is agreed between the parties.
Bellzone is listed on the AIM market of the London Stock Exchange under the ticker 'BZM'.
www.bellzone.com.au
Chairman's Statement
We are pleased to bring shareholders our annual results in what has been an exciting and transformational period for the Company which culminated in the Company announcing a maiden JORC resource, listing on London's AIM market, reaching a Binding MOU with CIF to develop the rail and port infrastructure for the Kalia Iron Project and signing an Accord with the Republic of Guinea providing Bellzone the exclusive rights to conduct the technical and economic feasibility studies for the infrastructure.
Bellzone has been in Guinea since 2007 and in July 2009, we further established our presence with the announcement of a maiden 'inferred' magnetite JORC resource of 2.4 billion tonnes at our 100% owned Kalia Iron Project.
The 'inferred' resource was the result of Bellzone's extensive diamond drilling, assaying and mapping programmes conducted over the course of the year. The resource was delineated along a 4.3km section of the 19km Kalia I magnetite strike, which demonstrates the scale and prospectively of the Kalia magnetites.
In the period, Bellzone completed the acquisition of Bellzone Holdings Pty Ltd sarl ('Bellzone Guinea') and Sadeka, two companies which hold the Kalia and Faranah iron exploration permits, the Kalia Polymetals permit and Albadaria exploration permit respectively. The Company also completed the Kalia exploration camp. The Kalia camp consists of accommodation for expat staff with facilities including office and communications, medical, heavy and light vehicle maintenance, four diamond drill rigs, one reverse circulation ('RC') drill rig, workshop, geological assessment and recreational areas.
In May 2009, the Company invited the Guinean Minister of Mines and Geology, the Honourable, Mahmoud Thiam, to visit the Kalia site. Mr Thiam was pleased with the progress at the Kalia Iron Project and continues to support Bellzone's commitment to building a world class mining operation and associated rail and port infrastructure in Guinea.
In addition to our operational achievements of 2009, in April 2010, the Company was successfully admitted to London's AIM market. Bellzone raised £33.6 million (US$50m) at IPO, attracting several blue chip institutions onto our share register.
The money raised will enable us to continue our magnetite and oxide resource development programmes and commence the SEIA and EIA studies and early works in support of the bankable feasibility study for our Kalia Iron Project.
In May 2010, the Company reached a Binding MOU with China International Fund to develop the rail and port infrastructure for the Kalia Iron Project. Under the terms of the Binding MOU, CIF will fund and construct the rail and port facilities for the Kalia Iron Project in return for the right to purchase 100% of the Kalia off-take, plus approximately 50% of the Kalia II Prospect and 100% of the Faranah Permit. In addition, Bellzone will gain a 50% interest in the highly prospective Forecariah Permits located on the proposed rail alignment and in close proximity to the coast. This agreement significantly de-risked Bellzone's implementation strategy by ensuring Bellzone's production value chain is secured from mine to customer. It also reduces Bellzone's infrastructure investment requirements by approximately US$2.7 billion.
Bellzone has also signed an Accord with the Republic of Guinea which provides the exclusive rights for a30 month period to the Project Perimeter to complete the technical and economic feasibility studies and gain Government approvals for the related Convention and Infrastructure Concession. During this exclusive 30 month period the Government will facilitate all administrative processes, procedures and activities likely to contribute to the optimal completion of the feasibility studies. The Government has also undertaken to approve the findings of the feasibility studies within one month of submission and will issue to Bellzone a Certificate of Exclusive B.O.T (Build, Operate and Transfer) Dealer on signing of the convention.
I would like to take this opportunity to thank shareholders and the Guinean Government for their continued support. The Company has to date successfully implemented programmes and delivered outcomes against its stated plan. Our staff are led by a committed and experienced management team who will continue to deliver results to plan as we continue to develop our large resources and de-risk the project implementation. I look forward to updating shareholders on the Company's progress through the course of the year.
Operational Review
Introduction
This operations report provides an update on the Company's activities for the financial period January 2009 to December 2009.
As part of the ongoing effort to develop value for shareholders, Bellzone successfully negotiated and acquired 100% of (Bellzone Guinea and Societe Sadeka SARL, representing ownership of the rights to explore and develop four licenses in the Republic of Guinea, West Africa. The licences include Kalia iron permit, Faranah iron permit, and the polymetals permit all owned by Bellzone Guinea and the Sadeka Nickel/Copper Permit.
Tenure and Licences
The Bellzone Guinea research permits are located approximately 360km, by road, east of the capital Conakry. The Faranah iron ore permit was successfully renewed in Octoboer 2009 for a two year period and the Kalia polymetals permit awarded in May 2009 for a three year period.
The Sadeka exploration permit is approximately 150km south east of the Bellzone Guinea permits near the town of Albadaria. The permit covers exploration for minerals commodities including copper, nickel, cobalt, manganese, platinum and chrome.
Bellzone Holdings Pty Ltd ('Bellzone Guinea')
Bellzone Guinea operates with a head office in the capital Conakry, which manages logistics, government liaison and financial management and a resource development camp, where all drilling and geological analysis occurs, on the Kalia site. The primary focus is the development of the Kalia iron resources, which underpins the development of the Kalia Iron Project.
Kalia Iron Project
Summary
On completion of the exploration drilling programme in late 2008, Bellzone developed a focused resource development programme to convert part of the estimated 13 billion tonnes of magnetite at Kalia into a JORC classified resource.
In July 2009 a maiden 2.4 billion tonne 'inferred' magnetite JORC Resource was reported. Since July 2009 the drilling programme has focused three key value add activities;
1 Extending the maiden JORC resource by completing an additional 1.6km extension to the north west
2 Proving up the zone identified as "Exploration Potential" in the July 2009 JORC resource report and;
3 Conducting an infill drilling programme to delineate the ore sufficiently to define a 'Measured' and 'Indicated' Resource.
Resource development upgrades to 'Measured' and 'Indicated' status of the magnetite JORC Resource are planned for Q3 2010.
As part of accelerating the magnetite resource definition programme, a RC drill rig was contracted to conduct pre-collar drilling. The RC rig was re-assigned in May 2010 to develop the oxide potential at Kalia I.
An in-house pre-feasibility study has been completed, which has indentified a preferred port location and preliminary design, rail route options, plant mass balances, flowsheets and preliminary layouts and a capital cost estimate.
Bellzone, with the assistance of the Guinean Ministry of Environment, conducted a preliminary environmental study for the resource development programme. All the necessary approvals have been obtained for Bellzone's environmental resource development procedures and processes.
During Q1 of 2010, the SEIA and EAI scopes of work for the Kalia site were developed and issued for tender. The vendor responses were analysed and the contracts awarded to SGS Environment in May 2010.
In April 2010, the Bellzone Conakry office was relocated to new premises, which has a more convenient location and sufficient space to cater for the development of the in-country operational and project teams.
Work Completed: January 2009 to December 2009
Work completed for the period January 2009 to end December 2009 includes the following;
• 20,669m of diamond drilling
• 4,972 samples assayed
• Downhole surveys of direction, density, magnetic susceptibility and natural gamma
• Survey control benchmarks established
• Metallurgical testwork results indicate a high quality concentrate, +69%Fe, low impurities with 95% Fe recovery can be produced
• Developed and tested an integrated database reporting system to maintain information integrity
• Wet weather road access developed to allow operations to continue through the wet season
• In-house feasibility study completed for both mine and infrastructure
• Digitized rail route options developed
• Preliminary environmental studies completed and approvals obtained for resource development procedures and processes
Work Completed - January 2010 to May 2010
The resource development programme to extend the 'inferred' JORC and upgrade the status to 'Measured' and 'Indicated' in the magnetite is on schedule. In addition, critical project development work has been commenced that will assist in Company value add and maintain the project development schedule. Work completed for the period January 2010 to May 2010 includes the following:
• 5,887m of diamond drilling and 2,410m of RC pre-collar drilling.
• A total of 39,418m of drilling has been completed at Kalia I
• 4,036 samples assayed
• A total of 10,676 samples have been assayed from Kalia I
• Downhole surveys of direction, density, magnetic susceptibility and natural gamma
• Survey control benchmarks established
• Oxide drilling programme is on schedule and started in May 2010
• Grindability tests and concentrate recovery optimisation testwork is in progress
• Bulk test to increase confidence in the metallurgical parameters of the magnetite is being scoped and planned for July 2010.
• SEIA and EIA contracts have been awarded to SGS Environment, with work commenced in May 2010 and is expected to be completed by Q2 2011.
Kalia Magnetite Metallurgy
In support of the Inferred JORC Resource, a number of Davis Tube Recovery ('DTR') tests were undertaken to assess the quality of concentrate that could be produced from the Kalia magnetite resource. The table below summarises the results. Further DTR testwork is currently underway to increase the confidence and metallurgical knowledge of the magnetites. The results will support the 'Measured' JORC resource, due in July 2010, and will assist with defining the metallurgical design and bulk testwork parameters for the project.
Concentrate Potential
| Bench Test Davis Tube Recovery Results | |||||
| Ore Type | Fe % | SiO2 % | Al2O3 % | S % | P % |
| BIF - average grade | 29.48 | 45.22 | 2.31 | 0.85 | 0.07 |
| Concentrate - average grade | 68.75 | 3.47 | 0.12 | 0.35 | 0.01 |
·; Concentrate highlight grade of +68% fe
• Low sulphur and phosphorous content
• 35% mass recovery
• Iron recovery of up to 95%
Kalia Exploration Programme
The exploration programme at Kalia is targeted at increasing the current JORC compliant resource within the Primary Magnetite zone at Kalia I and defining the potential of the oxide mineralisation. Diamond drill rigs are being utilised to define the magnetite mineralisation and an RC drilling rig is being used to define the oxide mineralisation.
For the primary mineralisation initial sections are drilled on approximately 1,000m spacing's with drillholes 200 to 400m apart along the sections, 5,500metres of strike continuity has been drilled. Drillholes into the magnetite are +400m deep with the deepest hole drilled being 1004m, which defined magnetite mineralisation to 800m below the oxide cap.
The oxide drilling programme is targeted at defining the quality and the extent of the oxide mineralisation. The distribution of oxide mineralisation is variable in both type and thickness. At the completion of the first pass of drilling sufficient data will be available to define an 'inferred' oxide resource.
Kalia Drilling
The Drilling programme has advanced significantly at Kalia with a systematic approach to resource definition drilling. Four diamond drill rigs have been used on a single shift. The programme objectives are to increase the size of the defined JORC resource and to increase the quality of information to allow the resource category to be progressively upgraded. To that end, drilling has extended the drilled area by 1.6km to the North West and an infill programme to increase both the density and depth of the resource is being completed across 2km of the existing 'inferred' JORC resource. To facilitate the programme a RC drill rig has been used to drill precollars for some deeper holes. As part of the drilling programme and to comply with JORC requirements drillholes continue to be gyro surveyed with additional in-hole data collected including, magnetic susceptibility, natural gamma and density. DGPS survey of the drillhole collar positions is being completed by STI, a Conakry based licensed surveyor.
A summary of the drilling completed on the Kalia Iron Project as at June 2010 includes:
Total Diamond Drilling
• 98 completed drillholes, 4 in progress
• 37,407 metres drilled in completed drillholes
• 28,312 metres of gyro directional survey
• 24,157 metres of magnetic susceptibility and 22,476metres natural gamma survey
·; 14,201 metres of density survey.
Total RC Drilling
• 98 drillholes completed
• 4,759 metres drilled into oxide
• And 2,311 metres drilled in 6 pre collars
Maiden 'Inferred' Magnetite JORC Resource
Bellzone has completed a maiden JORC Resource Estimate ('MRE') for the Primary Magnetite at Kalia. CSA Global completed the Resource Estimate.
| Bellzone – Kalia Magnetite Deposit – Mineral Resource Estimate as at 22nd July, 2009 | |||||||||||
| JORC RESOURCE CLASS | Magnetite Host Material | Billion Tonnes | FE % | S % | SiO2 % | AI2O3 % | P% | LOI | In-situ Dry Bulk Density | ||
| INFERRED | BIF | 2.06 | 29.8 | 0.81 | 45.52 | 2.1 | 0.07 | 0.8 | 3.4 | ||
| INFERRED | Schist | 0.33 | 8.9 | 0.13 | 47.0 | 7.7 | 0.04 | 8.4 | 2.9 | ||
| TOTAL INFRERRED | | 2.39 | 26.9 | 0.72 | 45.5 | 2.9 | 0.07 | 1.9 | 3.3 | ||
| | | | | | | | | | | ||
| EXPLORATION POTENTIAL | BF + Schist | 06 – 1.0 | 20 - 30 | 0.1 – 0.9 | 44 - 50 | 2 - 8 | 0.04 – 0.08 | 3 - 9 | 2.9 – 3.3 | ||
Following the completion of the MRE, the drilling programme continued to define extensions to the JORC both along strike and down dip. In January 2010, the focus of the drilling switched to infill drilling to increase both geological knowledge and definition of grade distribution with the aim of upgrading 40% of the current resource to 'Measured' and 'Indicated' status. This infill drilling programme was planned based upon CSA model and was implemented based upon CSA's requirements to define a 'Measured' Resource.
Sadeka Nickel-Copper Project
Summary
The Sadeka Exploration Licence is located approximately 600km by sealed road east of the capital Conakry, Republic of Guinea. The Licence (A2008/3638/MMG/SGG) covers an area of 4,366 km2 with the rights to explore for Ni, Cu, Co, Mn, Pt and Cr. The exploration is at a greenfields stage and is managed from a 20 man camp located at Albadaria, approximately 56km north of the town Kissidougou. The exploration to date has identified a number of exciting prospects for nickel and copper.
Geology
The Sadeka Licence is underlain by Archaean granite gneiss basement of the Dabola Group, greenstones of the Cambui Series and Late Archaean to Mesozoic intrusions of basite, hyperbasite, granitoid, pegmatoid, gabbro and dolerite composition. The prospective rock units belong to the Cambui Series which contains Ni-Cu bearing pyroxenites and ferruginous quartzite (metamorphosed BIF). Nickel and copper sulfides have been identified in pyroxenites on surface with quantities up to 10% of the rock. These rocks are metamorphosed to upper amphibolite-granulite facies with a structural fabric to the northwest. The area has been intruded by Mesozoic gabbro-dolerite dykes with both northwest and east-west trends.
Exploration Programme
The work completed is as follows:
• Camp upgraded to support the programme
• Geology Mapping (1:200,000, 1:50,000 and 1:25,000 scales)
• Prospect identification (13 identified to date)
• Soil/rock chip geochemistry - 2,999 samples analysed; 2,843 awaiting analysis
• Petrography of Ni-Cu sulphides
• Drilling - 1004.7m
• Ground geophysical surveys
o Radiometry
o Magnetics
o Magneto-telluric (NSAMT)
Targets
The work completed to June 2010 has identified 13 highly prospective Ni-Cu targets that require further investigation. The target zones incorporate Ni-Cu bearing Pyroxenite that occur as scattered rafts within a "sea" of granitoids that both 'pre' and 'post-date' the Pyroxenite. The granitoids that post-date the Pyroxenite have granitised the lower margins of the Pyroxenite rafts and have therefore destroyed any Ni-Cu mineralisation in those zones. However, if an economic concentration of massive Ni-Cu mineralisation is preserved in the subsurface, then it will occur within these rafts of Pyroxenite. The Pyroxenite themselves are interpreted to have once been a mafic-ultramafic sequence of intrusive bodies prior to metamorphism. Examples of Ni-Cu deposits within these rock types around the world include Noril'sk-Talnakh (Russia), Sudbury (Canada), Radio Hill (WA) and Mt Keith (WA).
To test if economic concentrations of Ni-Cu sulphides occur within the Pyroxenite rafts, a drilling programme is planned for the 2010 - 2011 field season. The Drilling will systematically target the best anomalies according to priority. Priority is determined by strength of soil anomalism, magnetism and NSAMT conductivity as determined by surveys that have already been completed.
Binding MOU with China International Fund
In May 2010, the Company reached a Binding MOU with China International Fund to develop the rail and port infrastructure for the Kalia Iron Project. In addition, Bellzone and CIF agreed to create a 50:50 joint venture to finance, develop, produce, transport, export and sell iron ore from the Forecariah Permits held by a subsidiary of CIF in south west Guinea, some 40km from the coast.
The Binding MOU is subject to the parties agreeing and executing definitive agreements for the infrastructure company, joint venture agreement and off-take agreement on or before 30 June 2010 or such later date as is agreed between the parties.
Highlights of Binding MOU are detailed below:
·; CIF shall fund the entire infrastructure required for the Kalia Iron Project. The infrastructure will include the rail system (including rolling stock), bulk storage facilities, port, port loading facilities, port services and power development required to produce and transport a minimum of 50 million tonnes per annum of iron ore from the Kalia Mine Site.
·; Bellzone shall transfer to CIF, with the agreement of the Guinean Minister of Mines and Geology of the Republic of Guinea, an area equal to approximately 50% of the Kalia II Prospect and 100% of the Faranah Permit and all available data relating to it
·; On 14 June 2010, CIF incorporated KHM, a new company, dedicated to the development of the infrastructure. US$40 million was paid by CIF to KHM, which will be used solely to fund the feasibility study for the infrastructure required to transport and export production from Kalia. On incorporation KHM will be owned 100% by CIF
·; On finalisation and execution of the definitive agreements CIF will retain 90% of the issued share capital of KHM and Bellzone will be issued shares representing 10% of the enlarged issued share capital which shareholding shall be non-dilutable without the prior written consent of Bellzone (the "Carried Interest")
·; Bellzone shall retain the Carried Interest for the duration of the feasibility studies, construction and operation of the infrastructure without any obligation to finance the infrastructure
·; Bellzone and its subsidiaries will be guaranteed a perpetual priority access right to the use of the infrastructure for the transport and export of the production from the Kalia Iron Project on terms to be agreed between the parties
·; Bellzone and CIF agree to create a 50:50 joint venture to finance, develop, produce, transport, export and sell iron ore from the Forecariah Permits held by a subsidiary of CIF in south west Guinea
·; Bellzone agrees that CIF has rights to purchase 100% of the off-take from the Kalia mine site at market price (excluding any proceeds from the Kalia II Prospect transferred to CIF)
·; Bellzone will provide expertise to KHM in connection with the design, construction and implementation of the infrastructure and agree to provide expertise and knowledge, and assist CIF where possible with the development and implementation of the Forecariah iron ore resources.
Board Appointments
In November 2009, Christopher Mcfadyen resigned from his position as Non-Executive Director, to pursue other interests.
In March 2010, Bellzone was pleased to announce two new board appointments. Terry Larkan was appointed the Group's Finance Director and Simon Farrell joined as a Non-Executive Director.
Financial Review
Basis of Presentation of Financial Information
The financial information in this report is presented in accordance with the international Financial Reporting Standards ('IFRS') as adopted for use in the European Union.
Unless otherwise indicated in this report the Company's reporting currency is the Australian dollar. The Company has re-assessed the reporting currency to be used in future periods and has decided to adopt the US dollar from the beginning of 2010.
Accounting Policies
The Company has increased or changed a number of its accounting policies to reflect both the changing nature of its business during 2009 and continuing compliance with IFRS. The significant changes are:
• Inclusion of Going Concern policy
• Adoption of IFRS 8 Operating Segments
• Inclusion of a policy on Business Combinations.
Acquisitions
On 18 June 2009, the Company acquired 100% of its Joint Venture partner in Guinea, Bellzone Guinea and another Guinean company, Societe Sadeka SARL for a total consideration of US$5.7 million. The transactions, treated as asset acquisitions, have given the company total control of the Kalia Iron Project and other licenses owned by Bellzone Guinea as well as securing 100% of a nickel copper opportunity at Albadaria.
Prior to the acquisition of the Guinean companies and the dissolution of the joint venture, the Company had a right to 95% of the revenue from the processing of 1.25 billion tonnes of iron ore. Post the acquisition the Company now owns all of the Kalia Potential that currently has a JORC compliant 'inferred' resource of 2.4 billion tonnes. The elimination of the joint venture and the acquisition of the Guinea companies has simplified the ownership structure and project implementation.
The results of the Guinea subsidiaries have been consolidated into the financial statements from 18 June 2009.
Equity Issue Costs
During the second half of 2009, the Company incurred costs in preparation for the issue of equity in early 2010 which have been capitalised in the 2009 financial statements. In 2010 these costs will be included in cost of the issue of the equity. The amount capitalised is A$1,052,349.
There were no equity issues during 2009. In 2010 the Company completed an AIM listing and issued 96,000,000 to raise gross proceeds of £33.6 million US$50,000,000.
Dividends
The Company did not pay any dividends during the period and has no plans to make dividend payments in the foreseeable future.
Consolidated Operational results
Income
Finance Income decreased from A$2.3 million in 2008 to A$0.96 million in 2009 reflecting lower cash balances on hand as funds were expended on activities combined with lower interest rates.
Expenses
The material changes in 2009 versus 2008 were:
Employee entitlements paid to directors and senior management in the form of salaries or fees increased from A$538,000 to A$750,394.
Due to the acquisition of the Guinea subsidiaries, the 2008 comparatives for employee benefits and exploration need to be aggregated together and compared year on year. These costs totalled A$10.9 million in 2009 compared to A10.6 million in 2008. The expenditure in 2009 produced:
• In excess of 20,000 meters of RC and diamond drilling was achieved in the year by the company's drilling crews and equipment. This was comparable with rates achieved in 2008
• Employees averaged 22 expats on roster with 70 nationals peaking at 120 nationals during the year
• A maiden JORC was issued in the mid 2009.
The depreciation charge increased by 20% reflecting an increase in the depreciation rates applied to certain items of Property, Plant and Equipment to reflect their useful economic lives.
In 2009 an impairment charge taken in 2008 of A$1.6 million was reversed. The reversal reflected the recovery of advances that were treated as impaired in 2008.
Occupancy costs increased by 145% to A$442,956 reflecting the group's requirement to accommodate the increasing numbers of employees both in Perth and Conakry as activity on the project increases.
Travel and accommodation costs reflect the increasing numbers of advisors and expatriate employees in Guinea.
Balance Sheet
The material movements on the balance sheet are:
• Non-current assets have increased to reflect the investment in the acquisition of the Guinea subsidiaries and their assets
• Cash balances declined from A$33.9 million to A$14.5 million reflecting the activity in the development of the Kalia Iron Project and other corporate activities.
Treasury Management
During the year the Company managed its cash to meet its business activities and strategic objectives. The Company ended the year with A$14.5 million on hand after establishing a JORC resource at the Kalia iron deposit and acquiring 100% of the project. In April 2010, the Company listed on AIM and raised an additional £33.6 million (US$50m) to continue with the development of the Kalia Iron Project as well as to meet general working capital requirements.
Budgets and expenditure are carefully monitored and future capital raisings will be required to maintain the development plans for Kalia Iron Project.
Outlook
The focus for the coming year is on developing the Company's Kalia Iron Project and progressing the bankable feasibility study. Exploration activities are on schedule to deliver an increased in tonnage in Q3, an upgrade to 'Measured' and 'Indicated' status in Q3 and the establishment of a JORC resource on the oxide by year end.
Discussions with CIF are on track to execute definitive agreements by 30 June 2010. This will allow for CIF to commence the feasibility study on the rail and port infrastructure.
On completion of the definitive agreements with CIF, Bellzone will evaluate the appropriate exploration programme for the Forecariah Permits as part of the new 50:50 joint venture.
Nik Zuks
Managing Director
23 June 2010
|
|
| Consolidated |
| Parent entity |
|
| Notes | 31 December 2009 $ |
| 31 December 2008 $ |
|
|
|
|
|
|
| Continuing Operations: |
|
|
|
|
| Other income | 4 | 79,936 |
| - |
| Employee benefits expense |
| (5,963,321) |
| (822,363) |
| Depreciation and amortisation expense | 11 | (3,020,195) |
| (2,689,328) |
| Administration expenses |
| (894,326) |
| (206,493) |
| Consulting expenses |
| (1,934,443) |
| (2,516,411) |
| Exploration expenses |
| (5,387,442) |
| (8,537,448) |
| Legal expenses |
| (287,672) |
| (107,398) |
| Occupancy expenses | 6 | (442,956) |
| (180,448) |
| Travel and accommodation expenses |
| (936,744) |
| (592,355) |
| Reversal/(Impairment) of advances to related parties | 10,22 | 1,575,441 |
| (1,575,441) |
| Foreign exchange loss |
| (17,554) |
| - |
| Impairment of subsidiary loan | 9 | - |
| - |
| Loss on sale of property, plant and equipment |
| (156,020) |
| - |
| Results from operating activities |
| (17,385,296) |
| (17,227,685) |
| Finance income |
| 955,152 |
| 2,303,490 |
| Finance costs |
| (20,270) |
| (161,736) |
| Finance income net of finance costs | 5 | 934,582 |
| 2,141,754 |
| Loss before income tax |
| (16,450,714) |
| (15,085,931) |
| Income tax expense | 7 | (95,515) |
| (230,349) |
| Loss from continuing operations |
| (16,546,229) |
| (15,316,280) |
| Loss for the year |
| (16,546,229) |
| (15,316,280) |
| Other comprehensive income: |
|
|
|
|
| Gain on foreign currency translation | 17 | 11,125 |
| - |
| Other comprehensive income for the year, net of tax |
| 11,125 |
| - |
| Total comprehensive income for the year |
| (16,535,104) |
| (15,316,280) |
| Total comprehensive income for the year is attributable to: |
|
|
|
|
| Equity holders of Bellzone Mining plc |
| (16,535,104) |
| (15,316,280) |
|
|
| (16,535,104) |
| (15,316,280) |
|
|
| Cents |
| Cents |
| Earnings per share for loss from continuing operations attributable to the ordinary equity holders of the parent entity: |
|
|
|
|
| Basic loss per share | 27 | (3.925) |
| (3.636) |
| Diluted loss per share | 27 | (3.925) |
| (3.636) |
|
|
| Consolidated |
| Parent entity |
|
| Notes | 31 December 2009 $ |
| 31 December 2008 $ |
|
|
|
|
|
|
| ASSETS |
|
|
|
|
| Non‑current assets |
|
|
|
|
| Property, plant and equipment | 11 | 4,775,236 |
| 6,835,591 |
| Mineral properties | 12 | 4,718,514 |
| - |
| Total non‑current assets |
| 9,493,750 |
| 6,835,591 |
| Current assets |
|
|
|
|
| Cash and cash equivalents | 8 | 14,536,284 |
| 33,951,232 |
| Trade and other receivables | 9 | 443,371 |
| 1,044,280 |
| Inventories |
| 29,891 |
| - |
| Other current assets | 10 | 1,052,349 |
| - |
| Total current assets |
| 16,061,895 |
| 34,995,512 |
| Total assets |
| 25,555,645 |
| 41,831,103 |
| EQUITY |
|
|
|
|
| Stated Capital | 16 | 54,867,892 |
| 54,867,517 |
| Reserves | 17 | 11,125 |
| - |
| Retained losses |
| (31,862,509) |
| (15,316,280) |
| Total equity |
| 23,016,508 |
| 39,551,237 |
| LIABILITIES |
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | 13 | 2,436,520 |
| 2,253,968 |
| Borrowings | 14 | - |
| 7,776 |
| Provisions | 15 | 102,617 |
| 18,122 |
| Total current liabilities |
| 2,539,137 |
| 2,279,866 |
| Total liabilities |
| 2,539,137 |
| 2,279,866 |
| Total equity and liabilities |
| 25,555,645 |
| 41,831,103 |
| | | Ordinary shares | Reserves | Retained losses | Total equity | |
| | Notes | $ | $ | $ | $ | |
| | | | | | | |
| Attributable to equity holders of the Company | | | | | | |
| Balance at 1 January 2008 | | - | - | - | - | |
| Total loss for the period | | - | - | (15,316,280) | (15,316,280) | |
| Transactions with owners recorded directly in equity: | | | | | | |
| Contributions of equity, net of transaction costs | 16 | 54,867,517 | - | - | 54,867,517 | |
| Balance at 31 December 2008 | | 54,867,517 | - | (15,316,280) | 39,551,237 | |
| Balance at 1 January 2009 | | 54,867,517 | - | (15,316,280) | 39,551,237 | |
| Total loss for the period | | - | - | (16,546,229) | (16,546,229) | |
| Proceeds on equity issued | 16 | 375 | - | - | 375 | |
| Movement in reserves | 17 | - | 11,125 | - | 11,125 | |
| Balance at 31 December 2009 | | 54,867,892 | 11,125 | (31,862,509) | 23,016,508 | |
| The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. | ||||||
|
|
| Consolidated |
| Parent entity |
|
|
| 31 December 2009 |
| 31 December 2008 |
|
| Notes | $ |
| $ |
|
|
|
|
|
|
| Cash flows from operating activities |
|
|
|
|
| Payments to suppliers and employees (inclusive of goods and services tax) |
| (11,018,116) |
| (5,390,087) |
| Exploration expenditure |
| (5,921,178) |
| (7,532,895) |
| Net interest received |
| 1,618,967 |
| 1,546,592 |
| Net cash (outflow) from operating activities | 26 | (15,320,327) |
| (11,376,390) |
| Cash flows from investing activities |
|
|
|
|
| Payments for property, plant and equipment | 11 | (247,255) |
| (9,524,919) |
| Payments for investments | 23a | - |
| - |
| Consideration paid for asset purchase (net of cash) | 23b | (3,819,839) |
| - |
| Loans to related parties |
| - |
| (22,752) |
| Net cash (outflow) from investing activities |
| (4,067,094) |
| (9,547,671) |
| Cash flows from financing activities |
|
|
|
|
| Proceeds from issues of shares and other equity securities | 16,13a | 375 |
| 56,275,000 |
| Payments for share issue costs | 16 | - |
| (1,407,483) |
| Net cash inflow from financing activities |
| 375 |
| 54,867,517 |
| Net (decrease)/increase in cash and cash equivalents |
| (19,387,046) |
| 33,943,456 |
| Cash and cash equivalents at the beginning of the financial year |
| 33,943,456 |
| - |
| Effects of exchange rate changes on cash and cash equivalents |
| (20,126) |
| - |
| Cash and cash equivalents at end of year | 8 | 14,536,284 |
| 33,943,456 |